- Cattleya wrote:ew….
Hi Tim,
Thanx for calling me crap. I know I was 'creative' but I challenge your claim that it was illegal. There is no law saying that you have to disclose everything to the bank. There is only a statement in mortgage application form saying you have disclosed everything. And because you sign this, it becomes legally binding.
Now, before you jump on me… this application forms are drafted by the banks. THEY established all the rules and we are forced to abide by it. Anyway… good citizenship says you should play by the rules. But I'm not willing to give up $23000 for nothing… and for the greedy banks too.
I can understand why it is in your best interest to scare the public into succumbing to the Bank's rules because that's how you earn your living.
Allow me to make this simple for you:You lied on an application for credit
As a result, you have (a) "obtained a financial advantage by deception" thereby committing an offence and (b) breached your loan contract , providing your lender the right to call in your loan without notice.Your lack of integrity should not lead others into taking an approach that is both dumb and dishonest.
Oh, and your confidence is matched only by your ignorance.
Yossarian wrote:Cattleya wrote:ew….Hi Tim,
Thanx for calling me crap. I know I was 'creative' but I challenge your claim that it was illegal. There is no law saying that you have to disclose everything to the bank. There is only a statement in mortgage application form saying you have disclosed everything. And because you sign this, it becomes legally binding.
Now, before you jump on me… this application forms are drafted by the banks. THEY established all the rules and we are forced to abide by it. Anyway… good citizenship says you should play by the rules. But I'm not willing to give up $23000 for nothing… and for the greedy banks too.
I can understand why it is in your best interest to scare the public into succumbing to the Bank's rules because that's how you earn your living.
Allow me to make this simple for you:You lied on an application for credit
As a result, you have (a) "obtained a financial advantage by deception" thereby committing an offence and (b) breached your loan contract , providing your lender the right to call in your loan without notice.Your lack of integrity should not lead others into taking an approach that is both dumb and dishonest.
Oh, and your confidence is matched only by your ignorance.
http://www.austlii.edu.au/au/legis/nsw/consol_act/ca190082/s178ba.html
Up to 5 years in the slammer (Interest only!!)
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Cattleya wrote:Hi Carlin,I was able to show my accountant that 100% of Citibank loan went into the mortgage as suppose to paying lawyers fees, stamp duty etc. He let me have it as a deduction. He says it doesn't matter what loan you have, as long as the purpose is for investing. If you are "stupid" enough to invest with the more expensive loan…
The catch is, you must not tell the bank or they won't let you, they'll insist on LMI. It is also about timing:
For mortgage pre-approval, bank doesn't need proof of 20% money sitting in your acct for 3 months
The 3 months proof is only required when you already have the property and about to sign the contract.So I took the citibank loans when I was still looking. The money was sitting in my saving acct whilst I continued looking for the property. Lucky I found it a few weeks after citibank loans and arrange for contract day to be a few weeks after the 3months citibank date… just to be safe.
Because my savings acct was with Westpac, the lender looked into my acct himself and was happy to sign off the final mortgage approval.
So the key is timing and planning… good luck!
PS: I hate mortgage insurance because it is for the bank's benefit, not me.
Purchase price is $950k. If I go bankrupt, the bank sells my house.. say for $890k. The remaining $60k they claim from the insurance company while I get nothing.So it benefits them, not me. Honestly, why cough up $23,000 of your hard earned money just to safe their b***??!
sorry to drag up an old post, but would the interest on the personal loan be deductible if the loan drawn down and transferred into a savings account inter mingled with private funds? it was my impression that it wouldn't be after reading various articles in API
Hi the7,
In our case, the loan for the 20% deposit from Lender A went to Lender B to pay that deposit. All the funds have been borrowed for an IP so interest on both loans (the 20% with Lender A and the remaining 80% with Lender
is deductible.I'm not an accountant, but my understanding is that as soon as you start mixing up funds used for non-investment purposes with those used for investments then you're muddying the waters in terms of what interest you can pay. We keep all our loans separate for this reason – there's no confusion about what interest is deductible come tax time.
cheers,
Carlin
cheers Carlin, I may be confusing it with articles about using borrowed funds to service loan repayments.
I wish that I found this forum two months ago.. We purchased our first IP cross collateralize with our PPoR, which is under construction. I was under the impression that it was the only way we could do it without outlaying a big deposit. A little naive I guess, but you live and learn. I'll set about sorting it out.
Don't get me wrong. We're cross collaterised too, using equity in our PPOR to buy IPs. As I understand it – as the IPs gain in value you can request the lender to release equity they're holding over your PPOR.
See if you can get hold of a copy of the API mag article I mentioned earlier in this thread. That's what guided us with the way we bought our last IP as we wanted to avoid further cross collaterising.
excellent! I will try to get my hands on it. I'm confident that we will be able to refinance or swap to a line of credit when our home is complete, plus the IP is sub dividable, so there will be instant equity when that is done.
Hey Carlin, which is it?
The 2004 Feb or March (or both) issue of API?Cheers
Ben
just looked on the API site, was un aware that back in the day they used to spread an issue across 2 months
I ordered the issue and read the article today. Most of the important info that is in the article has been covered in this thread. It got me thinking about how I would get in the best position to remove cross security with our loans.
The bank conveniently for them valued our home which is being constructed at the purchase price of the land + the build cost ($114000 + 155000) $269000. homes in the already developed part of the estate that are the same size have been on the market for 400k+. Note this was the purchase price of the land in Nov 2007. we also have 50k as backup money and to use to complete the house (driveways landscaping floor coverings) etc. once our house is complete and our construction loan is fully drawn we will owe 200k and I expect it will be worth around that 400k mark. we bought our IP for 245k with 2k deposit and borrowed 265k roughly 11k closing costs and just under 11k left over to go towards sub division costs. I think that once the IP is sub divided the conservative vale of the property will be about 225k for the portion with the house and 110k for the vacant land
the examples given in the API article show how to structure loans before you purchase an IP . My question is how do I structure things to remove our home as security? The loans are with the CBA they are both 3yr economiser (variable) currently 4.96%. I'm thinking I need to wait till our home is complete, then refinance to a line of credit and use it to put down a deposit (20%) and refinance the IP with a different lender (80%). Have I got the right idea? Are there any other options?
The loans are with the CBA they are both 3yr economiser (variable) currently 4.96%. I'm thinking I need to wait till our home is complete, then refinance to a line of credit and use it to put down a deposit (20%) and refinance the IP with a different lender (80%). Have I got the right idea? Are there any other options?
In essence you are correc t however the only part of the loan which should be a LOC would be the additional borrowing over and above the principal loan amount. Whilst a 20% deposit avoids LMI you will use up your avaiable funds fairly quickly so balancing item between paying LMI and buying additional IP's.
Hope this makese sense.
Richard Taylor | Australia's leading private lender
Thanks Richard,
are you saying it would be better to set up a separate loan for the 20% deposit secured against the PPoR rather than refinance the PPoR to a line of credit with a split option (separating the interest costs from th home and the IP)?
In the example used in the API article, the investor has a PPoR worth 400k and owes 150K. the investor sets up what they call a MF, Master Facility to borrow up to 80% value of the PPoR. 170k (MF) + 150k (owing on home) = 320k = 80% of the home value.
This Master Facility in then used to fund the deposit and settling costs (stamp duty etc) for two IPs costing 300k each.
10% deposit from MF
80% loan for IP
10% from MF
costs also from MFIP1 costs 300k funds from MF 20% = 60k + 15k settling costs = 75k
IP1 costs 300k funds from MF 20% = 60k + 15k settling costs = 75k total from MF 150k
MF is now drawn to near the limit of 170k.
are you saying it would be better to set up a separate loan for the 20% deposit secured against the PPoR rather than refinance the PPoR to a line of credit with a split option (separating the interest costs from th home and the IP)? YES
Richard Taylor | Australia's leading private lender
Mortgage Life Insurance refers to an insurance policy that guarantees repayment of a mortgage loan in the event of death. Its purpose is to pay off the debtors mortgage and leave the family with a mortgage free home….
Kailyn wrote:Mortgage Life Insurance refers to an insurance policy that guarantees repayment of a mortgage loan in the event of death. Its purpose is to pay off the debtors mortgage and leave the family with a mortgage free home….The topic of this thread is lenders mortgage insurance. This protects the lender if the borrower defaults. The borrower will then be pursued by the insurance company.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Wow, thanks for telling us that.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
is deductible.
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